This article describes the revision of AS 15 with regard to the retirement benefits of employees. The article also focuses upon financial implications of the revised standard and important accounting and disclosure requirements of AS 15 (2005).

Accounting Standard (AS) 15 on `Retirement Benefits' was revised in 2005 (ICAI, 2005) and the scope of the standard was enlarged to encompass all major accounting issues relating to employee benefits. Revised AS 15 [hereinafter referred to as AS 15(2005)] is formulated on the basis of corresponding International Accounting Standard (IAS) 19 on employee benefits. AS 15(2005) has adopted a detailed approach to deal with the various issues related to the measurement of employee benefits and disclosure thereof. The key issues with employee benefits are estimating the cost of the benefits and allocating their cost to the appropriate accounting period. Employee benefits accounting becomes important for the matching problem that arises due to the lag between periods when an enterprise consumes the economic benefit arising from the service provided by an employee and the period in which the employee benefits are received by an employee in exchange of such services. Such lag arises due to the very nature of some employee benefits (e.g., gratuity, pension or long service leave) that becomes payable after retirement or after a long period.

This article describes the regulations relating to accounting of employee benefit costs as introduced through the revision of AS 15. After giving a brief overview of the various types of employee benefits, it touches upon the financial implications of the revised standard and background of its revision. Thereafter, it describes the important accounting and disclosure requirements of AS 15(2005). In the penultimate section, the differences between the international standard (IAS 19) on the subject and the revised AS 15 are considered. The last section gives concluding observations.

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